A bank's liquidity needs can best be satisfied by holding
A)small business loans.
B)Treasury bills.
C)long-term Treasury securities.
D)both small business loans and long-term Treasury securities.

Question

Quizplus · Accepted Answer

Holding Treasury bills is the best choice for satisfying a bank's liquidity needs because they are short-term securities with a high degree of liquidity, meaning they can easily be sold on the open market if the bank needs quick access to cash. Small business loans and long-term Treasury securities are not as liquid and may take longer to sell or convert into cash.

A Bank's Liquidity Needs Can Best Be Satisfied by Holding